How Alpha Insights Handles Refunds

Refunds affect your profit, and Alpha Insights tracks them automatically. This guide explains how refunds are calculated and displayed in your reports.

Automatic Refund Detection

Alpha Insights automatically detects when:

• Order is fully refunded
• Order is partially refunded
• Refund is processed through WooCommerce

No manual entry needed – refunds sync automatically!

Refund Impact on Profit

Full Refund

What happens:

	Original order: $100 revenue, $40 cost, $60 profit Full refund: -$100 revenue Result: $0 revenue, -$40 profit (you're out the cost)

Net impact:

• Revenue reduced by refund amount
• Costs remain (you already incurred them)
• Profit becomes negative by cost amount

Partial Refund

Example:

	Original: $100 revenue, $40 cost, $60 profit Partial refund: $30 (one item returned) Result: $70 revenue, $28 cost (adjusted), $42 profit

Alpha Insights:

• Recalculates based on remaining items
• Adjusts costs proportionally
• Updates profit automatically

Refund Handling Options

Configuration

Go to Settings → General Settings → Refund Handling

Option 1: Deduct from Period (Default)

How it works:

• Refund reduces profit in the period it occurred
• Original order profit remains unchanged

Example:

• Order placed Jan 15: Shows $60 profit in January
• Refunded Feb 20: Shows -$60 in February

Best for: Cash flow-based accounting, month-to-month management

Option 2: Reverse Original Order

How it works:

• Profit removed from original order date
• Historical reports update

Example:

• Order placed Jan 15: Shows $60 profit in January
• Refunded Feb 20: January profit adjusted to $0

Best for: Accrual accounting, accurate historical reporting

Option 3: Track Separately

How it works:

• Refunds don’t affect profit calculations
• Tracked as separate metric

Best for: Advanced users who want manual control

Viewing Refund Data

In Dashboard

• Refund Count: Number of refunded orders
• Refund Amount: Total refunded
• Refund Rate:% of orders refunded

In Reports

Profit & Loss Statement shows:

	Gross Revenue: $50,000 Less: Refunds: ($2,300) Net Revenue: $47,700

Refund-Specific Reports

1. Create custom report
2. Filter: Order Status = Refunded
3. See all refunded orders with reasons

Refund Metrics

Refund Rate

Formula:(Refunded Orders / Total Orders) × 100

Benchmarks:

• Under 2%: Excellent
• 2-5%: Normal for eCommerce
• 5-10%: Higher than ideal, investigate
• Over 10%: Concerning, address urgently

Refund Amount

Total dollar amount refunded in period

Impact: Directly reduces net revenue

Refund Reasons

If tracking refund reasons in WooCommerce:

• Product quality issues
• Size/fit problems
• Shipping delays
• Changed mind
• Received wrong item

Alpha Insights can report on refund reasons to identify patterns

Partial Refund Scenarios

Item Return (Keep Shipping)

Example:

• Original: $100 product + $10 shipping = $110 total
• Refund product only: $100
• Keep shipping fee: $10

Alpha Insights adjustment:

• Revenue: $10 (shipping kept)
• Cost: $6 (shipping cost)
• Profit: $4

Partial Item Return

Example: Order had 3 items, customer returns 1

• Alpha Insights removes that item’s revenue and cost
• Recalculates profit for remaining 2 items

Refund with Restocking Fee

Example:

• Order total: $100
• Refund: $90 (kept $10 restocking fee)

In Alpha Insights:

• Revenue: $10
• Profit: $10 minus applicable costs

Analyzing Refund Patterns

Refund by Product

Create report:

1. Filter: Refunded orders only
2. Group by: Product
3. See which products have high refund rates

Action: Improve product quality, descriptions, or discontinue

Refund by Traffic Source

See if certain channels have higher refunds:

1. Filter: Refunded orders
2. Group by: Traffic Source

Insight: If Facebook ads have 10% refund rate but email has 2%, may indicate targeting issues

Refund Timing

When do refunds occur after purchase?

• 7-30 days: Product quality, fit issues
• 30+ days: Warranty issues

Reducing Refunds

Product-Related

• Improve product descriptions
• Add more/better photos
• Include size charts
• Show product in use
• Honest marketing (don’t overpromise)

Shipping-Related

• Faster shipping (less buyer’s remorse)
• Better packaging (reduce damage)
• Accurate tracking information

Customer Service

• Quick pre-purchase support
• Clear return policy
• Proactive issue resolution
• Quality checks before shipping

Refund Cost Recovery

Restocking Fees

Some businesses charge 10-20% restocking fee:

• Covers cost of processing return
• Reduces refund impact
• Check local laws on restocking fees

No Return on Final Sale

• Mark clearance items as final sale
• Reduces refund rate
• Clear communication to customers

Return Shipping Paid by Customer

• Customer pays return shipping
• You keep original shipping fee
• Reduces refund cost impact

Tax and Fees on Refunds

Sales Tax

Alpha Insights automatically:

• Refunds include tax refunded
• Tax liability reduced accordingly

Payment Fees

Important: Payment processors usually don’t refund their fees!

• Original order: Paid $3.20 Stripe fee
• Refund: Still out the $3.20 (Stripe keeps it)
• Alpha Insights accounts for this in profit calculations